Sell Out Or Buy In  Essay

Length: 5 pages Subject: Economics Type: Essay Paper: #79229609 Related Topics: Ireland, Porters Five Forces, Status Quo
Excerpt from Essay :

Teeling and the Cooley distillery are coming to a crossroads. They started off with limited means and required a bailout to get their products to shelves. They are in a position now to finally reward shareholders who have never gotten a dividend of any sort or they can soldier on with a partner or on their own. They face the lucrative position of being a distinctly Irish operation. However, it is unlike that the current status quo can or should continue. The only qualification to that statement is that perhaps keeping it small and distinctly Irish is the priority. Three issues that are pressing and moving the situation along are lack of an advertising and marketing base, the inability to move shares and general and the fact that no return on investment is really possible for shareholders unless a buy-out or partnership is entered into. While national pride is something one can have, it does not justify investment in a company and the people involved cannot really dispose or move their shares easily.

External Analysis

The general environment for Cooley as run by Mr. Teeling is fairly easy to assess and take stock of. The Cooley facilities are not the biggest, the strongest or the most powerful. Instead, it is quite the opposite as the amount of power that Cooley and Mr. Teeling has to leverage is rather small. Cooley can continue to operate as it has been but there are several reasons why this might not be the optimal or "correct" solution. First of all, there have never been any dividends paid to the owners of the Cooley name because all profits have been turned back into the company. Second, Cooley has surely gained some national prominence in Ireland but there is little to no chance of Cooley gaining an international presence unless they do a partnership or sell out to a larger firm. There is a danger in selling out to a larger firm because they would immediately gain full command and control of all Cooley operations and they could thus do just about anything they wanted as a result. That being said, the uniquely Irish nature that many people in the spirits industry would crave would be something very sad to squander or break up. As noted in the case study, the Cooley distillery is years ahead of anyone else that wish to replicate and copy what is already being done. As also noted in the case study, Irish whiskey has to be aged for at least a couple of years (if not seven years) for it to be genuine Irish whiskey.

As for the industry environment, the Cooley and Teeling name are in pretty good shape when looking at Porter's five forces. In terms of new entrants, it has already been stated that someone wanting to do true Irish whiskey would not be able to sell anything for a number of years due to the requirements that exist. Indeed, true Irish whiskey has to be aged for a number of years before it can be sold and there is also the time it takes to set up the facilities and frameworks. As such, the threat of new entrants is really non-existent because it would take five to ten years for any new company or entity to enter the Irish whiskey fray.

The threat of substitute products or services is also unlikely because the "substitutes" that could be used have been around for a long time. Whether it be the Irish whiskey giants like Jameson and such or whether it be stuff like Scotch and the like, there is not really any real alternative to the real Irish whiskey that is made with the best materials and methods. Anything made without the best methods is not going to stand up against Cooley and alternatives like Scotch or whiskey/bourbon made anywhere else is not going to have the climate, casks and so forth that are specific to Irish whiskey like Cooley.

When it comes to the bargaining power of customers, there are not a lot of companies and people out there that make whiskey like Cooley's does. As such, Cooley has...

...

To be sure, many consumers of Irish whiskey just go for Tullamore Dew, Jameson and Bushmill's. Even so, there are those that crave what Cooley's has to offer and it is clear that they are willing to pay the price offered. Even so, Cooley's can only provide so much products and the demand is only so high.

This leads into the force of the bargaining power of suppliers. Because Cooley's does not have the marketing muscle and such that the big players have, their reach into certain markets is only so high. As noted in the case study, a firm entry into the United States is going to be quite hard when the shelves are dominated by the whiskey and whisky of the big conglomerates not to mention the established names mentioned before. Until or unless a partnership or acquisition of Cooley's is undertaken and completed, there is little to no chance that Cooley's could markedly improve their bargaining power in the marketplace as it is currently constructed and conducted. For much the same reason, the intensity of competitive rivalry is not there because Cooley is a bit player compared to the larger companies. In saying that, the force of new entrants is low, the threat of substitute products or services is fairly low, the bargaining power of customers is moderate, the bargaining power of suppliers is fairly low and the intensity of rivalry is moderate at best and will not get any higher without a corporate change. If the Cooley distributorship wants to be popular, they need to be bought out by or partner with a bigger player. This will get them more exposure, more revenue and more profit.

Internal Analysis

The firm's general strategy is to maintain a traditional Irish whiskey without compromising anything in the form of selling out to a firm that would gut that. The key resources would be the facilities in Ireland and the investors that have so far been extremely loyal to the Cooley name. They are currently profitable and they are in a very lucrative position in terms of the whiskey they push out but their resources in terms of advertising and expanding into new markets is basically non-existent and the shareholders might be getting impatient.

Financials

It is clear from the financials that the overall arc of the revenue and profit for the firm is pretty good despite the lack of advertising and expansionary revenue. There was indeed a dip in revenue from 2007 to 2008 but this can easily be attributed to the global financial crisis that occurred from 2007 to 2009. Even if the revenue and profit figures are small as compared to the larger distillers, they are moving in the right direction and their fluttering is easily explained.

VRIO

The firm is poised to capture a small amount of value. However, a partner that could catapult them into a higher position in existing markets and into new markets altogether (e.g. The United States) would immeasurably help this firm.

Competitive Advantage

The firm is poised to keep capitalizing on the purists that love the genuine Irish whiskey. However, people that are gained by advertising and such will miss out on the Cooley name.

Financial Analysis

In looking a little more deeply at the number given for Cooley, their revenue fell a lot less than their profit (even in terms of proportion) so they are well-prepared for economic storms. Further, their profit then soared to new heights but it has crested in recent years. Revenue went up almost two million in 2010 but profits dropped by nearly a third.

SWOT Analysis

The strengths of Cooley are that they are a genuine Irish whiskey with a strong investor base and they have the love of purists. The weaknesses of Cooley are that they are quite small as compared to other players in the market and they have no real ability to advertise and grow like they could or maybe should without a partner or acquiring firm. The opportunity for Cooley is to partner with or be bought out by a larger firm so that they can truly go global and give a return to investors. Finally, there is the threat of a buyer gutting the tradition of Cooley's and new entrants to the market are always possible, albeit a delayed threat.

Recommendation

It would seem that Teeling wants to balance taking the next step for Cooley and not selling out. Indeed, the best solution is probably to partner with (and not be acquired) by another firm. However, if a partnership will not get the advertising and market expansion that Cooley investors want, then a buyout is probably the only real solution because the investors will want a payoff at some point.

Conclusion…

Cite this Document:

"Sell Out Or Buy In " (2015, April 28) Retrieved January 17, 2022, from
https://www.paperdue.com/essay/sell-out-or-buy-in-2150053

"Sell Out Or Buy In " 28 April 2015. Web.17 January. 2022. <
https://www.paperdue.com/essay/sell-out-or-buy-in-2150053>

"Sell Out Or Buy In ", 28 April 2015, Accessed.17 January. 2022,
https://www.paperdue.com/essay/sell-out-or-buy-in-2150053

Related Documents
Buying or Not Buying Local
Words: 2561 Length: 9 Pages Topic: Agriculture Paper #: 37545239

However, local enterprises face problems related to diseconomies of scale and this has forced them to charge higher prices which the lower and middle income classes cannot afford. There are instances where the local governments have had to intervene by subsidizing their operations something that has worsened the citizen's tax burden. Proponents of buying local have posited that buying locally made goods enhances velocity of money arguing that the

Buying Process for a New Laptop the
Words: 679 Length: 2 Pages Topic: Education - Computers Paper #: 65990458

Buying Process for a New Laptop The influence of marketing, promotion and long-term branding on the buying process of products and services continued to be accelerated by greater use of analytics and more effective use of digital media and channels. The intent of this analysis is to evaluate how the buying process for a new laptop running Microsoft Windows 8 was completed, factoring in the effects of marketing in each stage

Buy and Sell Organs for Transplants: The
Words: 728 Length: 2 Pages Topic: Economics Paper #: 81248945

Buy and Sell Organs for Transplants: The consideration of the possible negative socio-ethical repercussions of allowing people to buy and sell their non-vital body organs for transplant fortifies the argument of all opponents to the proposition. As stated in the U.S. Constitution, human beings are created equal and given the un-separable rights to life, freedom, and the pursuit of happiness. While in the pursuit of these rights, the American society has

Buying Behavior of Organizations the
Words: 2885 Length: 6 Pages Topic: Business - Advertising Paper #: 42349934

The orchestration of all aspects of B2B marketing is significantly more complex and challenging as well, a point shown in the discussions. The researchers did find enough causality to create a model of value-driven marketing, and it does show that only through a continual focus and auditing of customer needs will B2B marketing reach the levels of performance in B2C markets (Leek, Christodoulides, 2012). There are also many limitations

Buy or Sell in Making
Words: 444 Length: 2 Pages Topic: Economics Paper #: 7427336

The buyer has a total of $115 worth of currency, $100 in dollars and $15 in local. The buyer is getting a deal no matter what, but will want to bring the price down a bit. The seller is also getting a deal no matter what, since the cost of a jacket is $30 or 200,000 local. From the seller's perspective, a discount is required to sell in local currency, as

Buy the Saying, "Humans Are
Words: 729 Length: 2 Pages Topic: Business Paper #: 18936456

As Underhill states, "Men and women differ in just about every other way, so why shouldn't they shop differently, too?" (98). Women, for example, walk at a relaxed pace and carefully examine the merchandise. Men, on the other hand, "seem like loose canons" and move much faster through the aisles and do not ask where anything is (similar to not asking directions when driving). If a man cannot find